Kickoff Keynote with Tony Hsieh, CEO Zappos

Hey, hey, party people! We’re in Vegas for PubCon 2009 and kicking things off with a fresh keynote from Zappos CEO Tony Hsieh. Actually, I’m kicking it off with a green apple, some orange juice and swift kick in the butt for forgetting to charge my laptop last night (50 percent power, For The Fail!). Cross your fingers I survive the day, eh?

[The ‘eh’ was to help us welcome Dawn to Vegas for her first conference as an Outspoken lady. She’s Canadian, you know? Canadians say ‘eh’ a lot. I’m funny.]

Brett Tabke is up on stage and immediately declares that PubCon 2009 will be the best conference ever in the tech industry. Period. He’s not being sarcastic. I’ve heard LOTS of people already complimenting the session line up so…he may be right about that. We’ll let you know how things play out on Friday. :p

Fun fact: Zappos offers tours to the public. They’re located next to the airport and will come pick you up. Sexy.

Pizza led Tony to Zappos. [This is just more proof that pizza leads to awesome.] Tony worked a pizza place and his now-partner Alfred was his number one customer. Alfred would come in and buy the same pie every day, often multiple times a day. Tony thought Alfred just really liked pizza — turns out he was taking it upstairs and selling it for more money by the slice. That’s why he’s now their CFO. Hee!

After the pizza business, he started LinkExchange. They sold that to Microsoft for $265 million. He’s been with Zappos since 2000. That’s like, since I was in high school.

Zappos sells shoes, kitchenware, electronics, etc. They’re not just shoes. They want Zappos to be about the very best customer service. They’re a service company that just happens to sell other stuff. People want Zappos to run an airline or buy the IRS. They’re not going to do that. This year. Maybe in 2020.

Over the past year, they’ve gotten a lot of nice recognition in the media. They’re the most proud of making Fortune’s 100 Best Companies to Work For. That was something they aimed for from the very beginning. According to Tony, Zappos has more than 11 million customers. Seventy percent of customers are repeat customers, which is pretty cool.

They’re philosophy on marketing is not to spend lots of money on it. Instead, they put that money into customer service and then let their customers do their marketing for them through word of mouth.

Customer Service:

They put their 1-800 number on every page.

They offer free shipping

They offer free RETURN shipping

They have a 365-day return policy for the indecisive (holla!)

Fast, accurate fulfillment

Most customers are “surprised”-upgraded to overnight shipping to create a WOW response.

Lots of customers will order 10 pairs of shoes, try them all on, and send back the ones they don’t like. Zappos likes to encourage that kind of behavior. It sounds low tech and unsexy, but the telephone is one of the best branding devices out there. They get their customers undivided attention for 5-10 minutes. And if they do it right, that interaction can have a huge benefit. They’ve found that every customer contacts them once during their lifetime even though 95 percent of their orders come from the Internet.

The number one priority at Zappos is company culture.

What they do internally:

No call times, no sales-based performance goals

5 weeks of culture, core values, customer service and warehouse training for everyone in the Vegas office.

They’ll pay you $2,000 to quit.

Interviews and performance reviews are 50 percent based on core values and culture fit.

They have a Culture Book they put out once a year. They ask employees to write a few paragraphs to say what the Zappos culture means to them. It’s completely unedited so you get to see the good and bad.

Zappos is about 3 Cs: Clothing, Customer Service and Culture.

People tell him that Zappos is happiness in a box, which is pretty awesome. I’m emo in a box. Rae’s a bitch in a box. Then she beats you with the box. In the face.

Zappos Core Values

deliver WOW through service

embrace and drive change

create fun and a little weirdness – they ask people in the interview process how “weird” they are. Hee.

be adventurous, creative and open minded – they ask people how “lucky” they are in life. Luck is about being open to the opportunity.

pursue growth and learning

build open and honest relationships with communication

buld a positive team and family spirit

do more with less

be passionate and determined

be humble

They’re committed to transparency. They give tours and let people wander around. They don’t lock up certain rooms or monitor who people can talk to. They have Zappos Insights to let subscribers ask questions.

“That’s great for Zappos, but it would never work for my company”. It actually doesn’t matter what your culture is or what your values are. It matters that you have them and that you commit to them. It’s about the alignment. Whatever you’re thinking, think bigger. Chase the vision, not the money.

What would you be so passionate about doing for 10 years even if you never made a dime? That’s what you should be doing.

There’s a huge difference between motivation and inspiration. I’m going to get that sewn a pillow. That I’ll then use to beat Rhea. Muahaha!

Evoluation of Zappos

1999: Selection

2003: Customer Service

2005: Culture and core values as our platform

2007: Personal emotional connection

2009: Delivering happiness

They build their brand one phone call at a time. You just have to make people happy. He shares some frameworks of happiness – perceived control, perceived progress, connectedness, vision/meaning. My framework of happiness is pizza. And with that, we’re out. I have to hop like a bunny to find a power outlet and go stare at Chris Hooley.

Your Comments

This has always been one of the things that has impressed me most about the vision of companies like Zappos. Too many businesses blindly chase sales figures and don’t place enough weight on customer service or the internal culture that is going to make that customer service exceptional.

Paying people to quit if they aren’t going to pan out is such a clever calculated risk, I’m surprised more people don’t do it – even at a lower rate. I think Zappos started at $100? You trade the time and money spent training them, plus a little bonus, for all the potential damage a non-committed person might do to your company culture and consequently the growth and reputation of your business. Separate the wheat from the chaff and build your business with the right core values – people first, then dollars.

damn. five weeks of prep before being put into the system. Citibank trained us like that as reps when I worked there frakkin 20 years ago. Then they got all corporate after I left, and killed customer service. Most companies these days give like 1/2 day training (if that), by another disgruntled employee, then you’re on your own. And we end up writing about what it means to get real service. As if that’s a dirty concept. WTG Zappos!

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